The biggest topic in the crypto universe right now - and you're most likely already aware - is the Bitcoin halving, which is about to happen in the next few days.
There is not exactly a fixed date for this, but it is expected to happen around April 20.
The big question of a million dollars (or dozens of Bitcoins) is: What can we expect for the price of classic virtual gold from this change?
First of all: what exactly is halving?
Yes, the topic is on the rise, but we can start in a more rational way, starting from the beginning that maybe you don't know what this means.
The Halving is nothing more than the moment of change in the reward of the Bitcoin issuance blocks. Beyond the technical aspects that come from the original project of what is so far the largest crypto of all, there are three points that are relevant when the topic is the halving itself: firstly, it happens every 210 thousand mined blocks; secondly, when a halving occurs the reward to miners is reduced by half; and, thirdly and even more important: it is very likely that neither you who read these lines nor I who write them will see the last halving.
Regarding the first point, it is a technicality that, as already mentioned, was defined in the original project and that is related to the maximum amount of Bitcoins that exist and will be mined - 21 million, which guarantees the scarcity of the asset, as well as gold, for example.
The second aspect deals with the incentive that exists for network nodes to continue mining: even with the reward decreasing (from 6.25 BTC to 3,125 BTC), the value of Bitcoin has risen considerably since the last halving in 2020 (from US$10 thousand to US$70 thousand at the most updated price). Miners make these calculations to evaluate whether it is worth continuing in the ecosystem.
The third point, about none of us seeing the last halving, has to do with the expectation of when it is expected to occur: considering that, with current computing power, a halving occurs approximately every four years, the last halving is expected for the year 2140, until we reach 21 million units of Bitcoin to be issued.
A big factor that should boost post-halving prices
In recent months, with the recent attack on the SEC's Twitter (or begin to exist.
To give you an idea, at the time the SEC authorized it, we had more than ten ETFs of this type; today we have exactly eleven. The value under management (which you can find there with the acronym AUM, for Assets Under Management) of these ETFs, which in January did not reach US$20 billion, today is close to US$60 billion.
And there's reason to think this is just the beginning: retail's entry more strongly into shoppers' camp. The explanation for this factor is given for two reasons: the history of crypto purchases comparing institutional and retail investors and also a relevant regulatory factor that exists in large American financial institutions.
The first point: the vast majority of those who buy crypto are retailers. Institutional investors participate more in the market by offering - and serving as a platform - than by necessarily holding these assets.
More relevant than that is the second: according to some rules in the United States, financial institutions can only offer clients ETFs that have been in existence for at least 90 days, to, for example, be able to verify the quality of these items before placing them in the shelves of these customers and allow them to invest in them.
And, here's the big coincidence: these ETFs will be turning 90 now between April and May 2024.
Why this "retail factor" can drive demand?
You may not understand the advantage of a traditional US financial institution offering a Bitcoin ETF, but let's think about a simpler example.
Think of a person with a profile more reluctant to new investments. And by reluctant, what we mean is: the person who might even take the risk of investing money in something new and isn't that scared of the risk and volatility, but only does it if they don't have a lot of work to do to work their money.
We're talking here about the type of person who simply hasn't invested in certain assets because they don't know how to do so.
Now think about that same person receiving a notification from the financial institution they have had an account with for many years. The potential for new investors who can simply enter this market because "it's easier now" is immense.
What does this "retail factor" have to do with the halving?
Someone might have thought that if "incentives are lower for those involved in Bitcoin mining at every halving, then mining must drop."
Well, whether that will happen or not is another 500, but the big relevant information about this is this: since efforts to mine new blocks will be less rewarded, it will be a little more difficult (and competitive) to obtain new units of Bitcoin.
Or, in much more direct terms: at the same time that there are Bitcoin ETFs that will be offered to clients with a greater predisposition to buy them in the US (which is a super relevant market for the crypto universe), we have a slightly higher difficulty (with this incentive reduced with each new mining block) to get new units. Demand will increase and supply will stabilize little by little.
The upward movement in the price of Bitcoin was already observed last year and continues this year.
If you already have some knowledge of the most undoubted economic law that exists - that of supply and demand - you have already understood the great potential that this brings.
We are not one to make price predictions, but the fundamentals of this combination between a potentially much higher demand and a supply that will be a little more complicated to obtain suggest that the price of Bitcoin still has a relevant margin to rise.
If you have understood the described scenario and agree with it, it is worth taking the opportunity!
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